OK, let’s stop the bubble machine right now

Om… you know I love you, but this is absurd. Like really, really crazy. Weblogs, Inc. was bought by AOL because of revenue and revenue growth. Eyeballs and pageviews had nothing to do with it–zero. No one in the marketplace is buying things based on eyeballs–no one. It’s all based on revenue. Well… we also had an amazing management team and systems in place–those are very important too.

However, no one–NO ONE–is paying $38 per web user because no one–NO ONE–has any hope of ever making that kind of money back! I can’t comment on specifics of our deal, but let me just say this is really, really flawed.

How much money does Boingboing, Gawker or Weblogs, Inc. make off of a user? Well, if they were to read a blog every other day and read two pages each time that would be a total of 350 pages a year.

1,000 pages = 1 CPM (cost per thousand). Blogs prob. monitzie on avererage at $2 to $5 per 1,000 pages. So, what you would make off an a really loyal who came back all the time is around $1-3 per year or 1/10th of the $38 a user number.

Boingboing, like any other web property, is worth 1-10x revenue and 5-30x earnings. So, if BB does 30-50k a month/360-600k a year (which seems possible to me based on the ~5m page views a month) it would be worth between 500k and $3M (based on revenue since with five mouths and server hosting to pay for it doesn’t really have earnings–yet!). Those numbers fall into line with my calculation of a really loyal user being worth $1-3.

Paying much more than that amount wouldn’t make much sense unless you were an affinity buyer or buying the talent (which is all part time and spoken for on other projects anyway). You would be much better off putting the $3M to work on hiring a staff of 10 writers @ $100k, putting 1M towards a management team, and $1M towards marketing. That’s how these deals tend to go down.. people look at the cost of buying vs. building, and the numbers you’re putting out Om puts out are so absurd it’s laughable.